MCV outlines what they call "the full story" of the collapse of THQ, the game publisher/developer that was just broken up due to bankruptcy. They hear from Jason Rubin, who served as president of the company during efforts to put it back on course, and he is frank in saying the made "massive mistakes," and that: "There are certainly things to be said about challenges in the mid-tier triple-A publishing business, but I don't think that conflating it with THQ's experience is helpful." Here's a bit of his take on what went wrong:

Unfortunately, the mistakes that were made long before I joined, like the incredible losses attached to uDraw, massive wasted capital in the unpublished MMO that was cancelled, sticking with children's and casual titles far after mobile and tablets had killed the business, bad, late, or otherwise inferior titles like Homefront, and a generally haphazard and inefficient approach to deal making, left the company with too much negative hanging on its books.

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Beamer wrote on Feb 1, 2013, 14:09:But video games aren't particularly high upside. They're something very difficult to predict performance and they're costly. Most VCs aren't playing with the kind of money that multiple AAA game development would require.

Plus, the typical endgame for a VC is selling a company or taking it public.

What would a VC do? Would they finance a game? I don't see them liking that, as that's a loan not VC. They'd prefer to buy a studio. Again, as others said, new boss same as the first. VCs typically sell to PE firms, who wipe out old management and put in their own.

Typically. Although such investment in a smaller studio could be taken in the form of equity, at which point, after a success, they could sell the studio to an interested party (as they now have a track record). Additionally, you could sell revenue streams and IP just as easily as you could a company (although video games, unlike movies, have a much, much shorter tail - making it a proposition where you'd be looking to shop the IP, and possibly throw in a couple of the studio's creative directors to help manage it).

There are VC firms that do specialize in high-risk lending, but the terms are usually about as onerous as the above stated "you surrender control of the company and we'll help you get this out there".